Why Has Motilal Oswal Turned Cautious on HDB Financial After Weak Q2?
Motilal Oswal has reiterated its Neutral rating on HDB Financial Services with a target price of ₹820 after a subdued Q2FY26 performance marked by muted AUM growth and elevated credit costs.
The brokerage highlighted that while NIM expansion was aided by a lower cost of funds, profitability was weighed down by higher provisions and stress in the commercial vehicle and construction equipment (CV/CE) segments due to monsoon disruptions.
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Motilal Oswal believes that sustained credit normalization, better collections, and improving liquidity may help stabilize asset quality in H2FY26. However, higher credit costs could continue to pressure near-term earnings.
With valuations appearing fair and business normalization still underway, the brokerage prefers to stay cautious until visible improvement in disbursement growth and risk metrics emerge.
Motilal Oswal expects steady NIM traction but limited re-rating potential given the current earnings trajectory and moderate AUM growth.
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Overall, the note implies a balanced view — solid operational efficiency but limited upside given elevated provisioning and slower credit momentum.
Investor Takeaway
Indian-Share-Tips.com Nifty Expert Gulshan Khera, CFP®, who is also a SEBI Regd Investment Adviser, believes HDB’s long-term fundamentals remain sound, but investors should wait for visible improvement in asset quality before re-entry.
For more research-backed views, visit Indian-Share-Tips.com, which is a SEBI Registered Advisory Services.
SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
